Amortization Calculator
Generate a complete amortization schedule for any loan. See monthly principal and interest breakdown, remaining balance, and how extra payments accelerate payoff.
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Amortization Schedule (Yearly)
| Year | Payment | Principal | Interest | Balance |
|---|
Understanding Amortization
Amortization is the process of spreading a loan into a series of fixed payments over time. Each payment covers both interest and principal, but the ratio between them shifts dramatically over the life of the loan. In the early years, most of your payment goes to interest; in the later years, most goes to principal.
The Amortization Formula
The standard amortization formula is:
How Extra Payments Work
Extra payments go directly toward reducing the principal balance. Since interest is calculated on the remaining balance, every dollar of extra principal means slightly less interest on every future payment. Even small consistent extra payments can save tens of thousands of dollars and years off a 30-year mortgage.
For example, adding $200/month in extra payments to a $320,000 loan at 6.75% saves approximately $78,000 in interest and pays off the loan about 8 years early.
Yearly vs Monthly Amortization
The yearly schedule above summarizes totals for each year. In a monthly schedule, you can see the exact split of every single payment. Early in a 30-year mortgage at 6.75%, roughly 75% of each payment goes to interest. By the midpoint, it's close to 50/50. In the final years, over 95% of each payment reduces principal.
Types of Amortized Loans
Mortgages are the most common amortized loans, but the same principle applies to auto loans, student loans, and personal loans. Any loan with fixed periodic payments that pay off both principal and interest uses amortization.